Weaponising Investments by Unknown

Author:Unknown
Language: eng
Format: epub
ISBN: 9783031414756
Publisher: Springer International Publishing

5 Beyond the EU Framework for FDI Screening: The Pandemic of COVID-19 and the War in Ukraine

The process of adoption of the EU FDI screening mechanism unlocked the policy connection between economy and security, which in the years that followed has become increasingly normalised and present in new policies. The pandemic of Covid-19 and Russia’s invasion of Ukraine have then created tangible situations where the whole of the EU saw the risks connected with an open economic relation that left space for overdependencies and exposed EU’s vulnerabilities. The two events also highlighted how economic relations could be instrumentalised to influence policies or diplomatic objectives, such as the case of the so-called mask diplomacy carried forward by China during the pandemic or the interruption of gas supplies to Europe by Russia in response to EU’s sanctions against Russia. Both gifted the EU with the necessary momentum to increase attention and action towards better understanding how vulnerable the EU is and how to improve its own resilience. In 2021 and 2022, the EU carried on two assessments of dependencies proposed policies such as the Battery Regulation, the Chips act and the proposal for a Critical Raw Material Act to decrease EU’s vulnerabilities and improve economic security.

Between 2019 and the beginning of 2022, the European Commission proposed ten new policies linked to economic security. 2022 also saw the proposal of new due diligence regulation, a regulation to fight force labour in EU’s supply chains and the approval of a regulation to control foreign subsidies within the EU market.

Smaller, yet highly impactful, episodes include the use by China of its economic weight to adopt economic coercive measure in response to Lithuania’s decision to open a Taiwanese permanent representation in Vilnius. The episode gave momentum to the EU’s anti-coercion instrument (ACI), which however was born out of concern linked to the coercive use of economic ties by the US under the Trump administration.

Tab with policy timeline.

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